On Thursday, Macquarie Group, Australias largest investment bank, announced its acquisition of Waddell & reed financial Inc., to expand its U.S. asset management business, according to Bloomberg.
The purchase price is 1.7 billion US dollars, about 11.1 billion yuan.
According to Macquaries official website, Macquarie is the top 50 global asset management companies. As of the end of the third quarter of this year, the total management scale of Macquarie reached 397.4 billion US dollars, which is close to being among the 400 billion giants.
Among them, Macquaries assets under management in the Americas region is about a $277 billion (US $205 billion).
According to public information, Waddell & reed (WDR) is one of the oldest mutual fund and asset management companies in the United States. Founded in 1937, the companys main revenue sources include asset management, commission of investment consultants and sales of investment products, with a management scale of 68 billion US dollars.
Shares of acquired companies soared nearly 50%
Macquarie valued Waddell & reed at $25 a share in cash, about 47% above its closing price in New York on Wednesday, according to Bloomberg.
Stimulated by Macquaries acquisition news, Waddell & Reeds share price also soared rapidly, rising by more than 47% before trading, and its market value exceeded $1.5 billion.
Net profit decreased by 32%
Acquisition may ease Macquaries current problems
On November 6, Macquarie released its semi annual results as of September 30, 2020.
As of September 30, 2020, assets under Macquaries management (AUM) was $556.3 billion, down 7% from $598.9 billion at March 31, 2020, mainly due to the impact of foreign exchange and the decrease of Macquarie investment managements contractual insurance assets.
In terms of performance, for the half year ended September 30, 2020 (1h21), the net profit after tax attributable to ordinary shareholders was $985 million, down 32% year on year.
In recent months, the covid-19 global health crisis and the far-reaching impact of its economic consequences on mankind have been eclipsed, shemara wikramanayake, managing director and chief executive officer of Macquarie Group, said in the financial report. These effects are reflected in our results, in particular credit and other impairment charges related to the continued impact of covid-19 on customers and customers, as well as delays in realising assets from our balance sheets and funds.
Waddell & Reeds third quarter net profit also declined slightly.
According to the companys third quarter report released on October 30, Waddell & reed achieved net profit of $30.523 million in the third quarter of fiscal year 2020, a decrease of 7.66% year-on-year. However, the companys revenue in the third quarter of fiscal year 2020 was $407 million, up 50.41% year-on-year.
After the completion of the acquisition, Macquaries AUM scale will be greatly improved, which can alleviate the pressure on performance brought by the decline of AUM scale to a certain extent. In addition, Macquaries profit is expected to increase after Waddell & Reeds consolidation.
On the whole, buyout fund companies can alleviate Macquaries problems to a certain extent, but the impact of the epidemic situation and the speed of economic recovery is also very important.
Macquarie pointed out in the latest financial report that the factors affecting the companys short-term prospects include: the duration and severity of the covid-19 pandemic, the uncertain speed of global economic recovery, the level of global government support for the economy, transaction completion rate and final review, and the impact of foreign exchange
For future performance, Macquarie said in its latest financial report that it was unable to provide meaningful earnings guidance for fy21. But Macquarie CEO said, although the economic impact of the covid-19 pandemic is still felt in the short term, Macquarie is still capable of delivering excellent performance in the medium term. This is because of our deep expertise in key markets; our strengths in business and geographic diversity and our ability to adapt our portfolio to changing market conditions; our ongoing plans to identify cost saving initiatives and efficiency; a strong and conservative balance sheet; and a proven risk management framework and culture.
There are also big acquisitions in the alternative investment sector
Macquaries asset management business is mainly carried out by Macquarie infrastructure and tangible assets investment fund and Macquarie investment management.
In addition to the acquisition of fund companies, Macquarie asset management in the alternative investment sector in the near future also made a big acquisition.
At present, there is still some uncertainty about the acquisition, and the Italian government will review the deal according to its gold power, the source said. Italy is in the process of enacting a decree to implement special review powers to protect strategic assets, including gas storage, from undesirable foreign acquisitions.